MBIA Unit Asks Judge to Make Bankrupt Vallejo Use Fees for Debt
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MBIA Inc.’s municipal-bond insurance unit is asking a bankruptcy court judge to order Vallejo, California, to make good on promises to pay investors in case of default by using money from vehicle registrations.
Debtor protection doesn’t pre-empt a state law that requires the use of the license fees to pay off city debts, National Public Finance Guarantee Corp. said in a motion filed Aug. 10 with U.S. Bankruptcy Judge Michael McManus. The income derived from the registration payments was used as a type of secondary pledge to back a $4.8 million bond issue in 1999.